Cuomo: $1.1 B in Medicaid Cuts, More Housing $, 3 Prison Closures

NYAPRS Note: In the 30-Day Amendments that Governors propose to alter the budget plans they originally released (in January of this year), Gov Cuomo is proposing .8% across the board cuts to Medicaid and a reprogramming of one time only healthcare transformation funds towards housing programs. We are hoping that some of these funds could be used to raise mental health housing rates. The cuts will apparently not affect Medicaid programs that are overseen by OMH, OASAS and OPWDD. The Governor will also be reconvening NY’s Medicaid Redesign Team which reshaped the Medicaid program while creating $17.1 billion in savings over a 5 year period. Stay tuned for more details!

Cuomo Walks Back $550 Million In Promised Health Care Funding

JONATHAN LAMANTIA   Crain’s New York Business  February 15, 2019

Gov. Andrew Cuomo, in addressing a potential budget gap, said across-the-board cuts of $550 million to Medicaid funds were needed in his budget proposal. The governor said the revision is necessary to support the state's spending plan for fiscal 2020, which starts April 1. The decision reverses his position in January: that the industry needed support to fend off federal cuts.

Because of the federal matching funds that support Medicaid, the health care industry is projecting the total impact to be $1.1 billion less than they expected after Cuomo's proposal last month.

Cuomo blamed the federal government's changes to the deductibility of state and local taxes for the state's budget gap, saying that the higher tax burden has caused some of the state's wealthy residents to relocate—or at least change their residence for tax purposes.

Cuomo released a three-prong plan to achieve the savings. The state is diverting funds it had earmarked for "health care transformation" toward housing programs, reducing "indigent care" funding, which supports hospitals that provide a large percentage of services to Medicaid and uninsured patients, and levying a 0.8% across-the-board cut to Medicaid payments.

The decision drew swift condemnation from the Greater New York Hospital Association and the state's largest health worker union, 1199SEIU, two of Cuomo's closest political allies.

"As we seek to balance this budget, it cannot be done on the backs of our most vulnerable communities, and the dedicated workers who provide exceptional care," said George Gresham, president of 1199SEIU.

"Many hospitals would curtail vital services—and some would close their doors for good," GNYHA President Kenneth Raske said in a statement. "Tens of thousands of health care workers would lose their jobs. We will take our message to the public that these cuts would spell disaster for health care in New York, and we will do so with every resource at our disposal."

The hospital group and union backed Cuomo's re-election and helped orchestrate political rallies the governor held in 2017 in support of the Affordable Care Act. The two groups, which combine their lobbying efforts through the Healthcare Education Project, cheered last year when Cuomo announced a 2% increase in Medicaid payments to hospitals and 1.5% for nursing homes that went into effect Nov. 1. That support has been eliminated as the state lowers the growth in Medicaid costs to 3%, down from 3.6% in the governor's proposal last month.

Cuomo also said he plans to reconvene the Medicaid Redesign Team, a group created in 2011 to rein in spending. It was made up of leaders from the health care industry and helped save $17.1 billion in a five-year period.

CLARIFICATION: This article has been updated to reflect that the $550 million in cuts are a downward vision from Gov. Andrew Cuomo's fiscal 2020 budget proposal presented in January 2019.


Budget Remains Balanced Despite Additional Reductions in Revenue Estimates

Governor Andrew M. Cuomo today announced changes to the FY 2020 Executive Budget Financial Plan, including re-estimates and amendments. Estimated tax receipts have been revised downward due to weaker personal income tax collections in December 2018 and January 2019. The downward revisions to receipts are offset by reductions in estimated General Fund disbursements and use of available resources.

"The federal government's politically motivated changes to state and local tax deductibility have already cost New York $2.6 billion," Governor Cuomo said. "As Washington continues their economic civil war by restructuring the economy to benefit red states, we are taking action to maintain a strong Financial Plan and safeguard New York's fiscal integrity."

Revisions in the Financial Plan include a $3.8 billion downward re-estimate to personal income tax collections over two years, including a reduction of $2.6 billion in FY 2019 and $1.2 billion in FY 2020. Specifically, the estimated payments component of personal income taxes has been lowered by $2.3 billion in the current year and $900 million in FY 2020, and the withholding component by $261 million and $344 million in the current and next fiscal year, respectively. The impact of the reductions is carried through the out-years of the Financial Plan, consistent with a lower base for both components. The decline in estimated tax receipts reflects changes in taxpayers' behavior including shifting patterns of payments responding to the Tax Cuts and Jobs Act of 2017.

The Updated Plan is balanced in both FY 2019 and FY 2020. The reduction in personal income tax receipts and costs from a new labor contract is fully offset by a combination of new proposals and administrative actions.

State Operating Funds disbursements are estimated at $100.1 billion in FY 2019, and $102 billion for FY 2020, consistent with the 2 percent annual spending growth benchmark in both years.

"The federal tax changes have been a major disruption to the Financial Plan," said State Budget Director Robert F. Mujica, Jr. "With these amendments to the Executive Budget and revisions to the Financial Plan we are taking this threat as seriously as it deserves."

The legislation and narratives for all FY 2019 Executive Budget amendments, along with the updated Financial Plan, are available on the New York State Division of the Budget's website.

Key changes to the Financial Plan include the following:

  • Three actions are advanced in the Medicaid program to generate an additional $550 million in General Fund relief. First, Health Care Transformation Funding which had yet to be distributed will be redeployed for housing services. Second, reflecting the strong balance sheets of Major Voluntary Hospital Systems, Indigent Care Payments will be reduced. Third, an across-the-board reduction in Medicaid provider reimbursement is proposed, which can include alternative approaches that achieve comparable savings. This reduction will approximate 0.8 percent and will not impact payments required by Federal law (i.e., Federally qualified health centers, hospice) or direct payments authorized under mental hygiene law. 

  • The Governor will also call upon the Department of Health to reconvene the Medicaid Redesign Team to conduct a comprehensive evaluation of the Medicaid program and offer recommendations to further improve access to high quality and cost-effective medical services and stabilize the long-term fiscal condition of the Medicaid Global Cap. The MRT will be comprised of health care industry leaders and stakeholders from across the State and will convene this year to conduct its evaluation and report recommendations to the Governor. Topics for review will include but not be limited to: addressing the needs of vulnerable populations, responding to the current Federal landscape, evaluating options to enhance affordable health insurance coverage and access, sustaining the future of our long-term care system and stabilizing fiscally distressed health care providers. 

  • The Financial Plan includes savings from the closure of up to three prisons to reduce excess capacity due to declining prison population.

  • Executive Budget amendments include legislation to protect the State's fiscal integrity by requiring bills with a fiscal impact passed after the budget has been enacted to be accompanied by a plan to pay for the costs of such bills.

  • Amendments to the Executive Budget will ensure towns and villages are not adversely impacted by changes to the Aid and Incentives to Municipalities (AIM) program. The proposal would direct counties to use additional sales tax revenue from the elimination of the internet tax advantage to keep towns and villages whole following the AIM reduction to less-reliant municipalities. To ensure locals receive these additional resources faster, the State will also implement the Internet sales tax requirements earlier, starting June 1 of this year as opposed to September 1, the date originally used in the Executive Budget.

  • Consistent with the Executive Budget and reflecting the uncertainty to State revenues attributable to federal tax reform, the Financial Plan continues the planned $250 million deposit to Rainy Day Reserves, the first of two planned deposits.

3 State Prisons On Chopping Block Under Cuomo Budget Changes

ALBANY, N.Y. (AP) - Three New York state prisons will be closed and other cost-cutting moves are needed to eliminate a multi-billion-dollar budget shortfall caused by a decrease in tax revenues, Gov. Andrew Cuomo said Friday, while releasing revised revenue estimates and amendments to his budget proposal.

The Democrat’s changes to the $175 billion spending plan he released to the Legislature on Jan. 15 include closing three of the state’s 54 correctional facilities by no later than Sept. 1. Cuomo said the prisons to be closed would be chosen after a review by state corrections officials.

Since Cuomo took office in 2011, the state’s prison population has decreased by 10,000 to just under 47,000, the lowest in 30 years, and several prisons have been shuttered.

“These new closures are another step toward reversing the era of mass incarceration and recognizing that there are more effective alternatives to lengthy imprisonment,” Cuomo said in a statement.

The closures won’t result in staff layoffs, he said.

The New York State Correctional Officers and Police Benevolent Association, the union representing prison guards, immediately criticized Cuomo’s plan, saying it will make prisons more dangerous, disrupt the lives of employees and devastate local economies.

“It means consolidating the incarcerated into other prisons, making them overpopulated and increasing the risk of violent behavior,” said Michael Powers, president of union.

Cuomo’s budget must be approved by the state Senate and Assembly, both controlled by Democrats.

The budget revisions and spending reduction proposals come 11 days after Cuomo and other state officials said New York’s income tax receipts were down by more than $2 billion. On Friday, Cuomo said the decrease was at $2.6 billion for the current fiscal year ending March 31 and $1.2 billion for the fiscal year starting April 1.

Cuomo is blaming much of the drastic dip in tax collections on changes Republicans in Congress made to the federal tax code in 2017, including capping a deduction for state and local taxes — known as SALT — at $10,000 starting in 2018. The tax cap particularly hurts people in high-tax states such as New York, which Cuomo and other Democrats say was the intention when Republican President Donald Trump signed the Tax Cuts and Jobs Act in December 2017.

“As Washington continues their economic civil war by restructuring the economy to benefit red states, we are taking action to maintain a strong Financial Plan and safeguard New York’s fiscal integrity,” Cuomo said.

Republicans have defended the tax overhaul, saying the states being adversely impacted happen to be Democratic-leaning states with high taxes. GOP leaders have said those states should address their high taxes first instead of criticizing Washington.

The governor’s other proposals to cut costs include several changes to the Medicaid program aimed at putting $550 million back into the state’s general fund.

His amendments also include a proposal to allow towns to use additional sales tax revenue from an elimination of the tax advantage out-of-state online retailers can have by not collecting New York sales taxes.

Cuomo said revenues collected locally as a result of the eliminated tax advantage will replace nearly $60 million in state funding cuts to town governments that he’s proposing in his budget.